In the first Democratic presidential debate, the five candidates — Hillary Rodham Clinton, Bernie Sanders, Martin O’Malley, Jim Webb and Lincoln Chafee — squared off in Las Vegas. The following is my take on the economics portion of the night.
First, the obvious: The distance between these Democratic candidates on economic issues is infinitesimally minuscule compared to the difference between their agendas and that of Republicans. They were extremely critical of the extent of wealth accumulation by the richest families — families they would tax to meet their progressive agendas. They were unanimous in condemning Wall Street, banks, bankers, shadow banks and financial “engineers.” They even had a pretty robust debate about capitalism itself, in which Clinton got to the right of Sanders by admitting that sure, she was a capitalist, but one who wanted to “save capitalism from itself.”
In this sense, inequality and financial excess played the role in the Democrat debate that immigration plays in the Republican debate. The difference is that the Democrats have a point.
With that, full disclosure: I’ve long worked in D.C. Democratic economic circles, and though I regularly and roundly criticize and praise ideas from both sides of the aisle, my orientation is certainly closer to what was said on this stage regarding economic policy than what we’ve heard so far from the Republican candidates.
And what a difference there is. Listening to the Republican candidates tout their tax cuts for those at the top of the scale and their spending cuts for those at the bottom, you’d quickly conclude that the problem with America is that the rich have too little and the poor have too much.
Listening to the Democratic candidates, on the other hand, you get the sense that these are the economic problems they believe government should try to solve:
—Inequality: GDP grows but working families struggle to keep up. Clinton made an important point on this. It’s one thing to raise the minimum wage, which they all appeared to support (though she supports going to $12 while Sanders and O’Malley want $15; Chafee and Webb didn’t speak on this point). But Clinton argued that their agendas must go further and reach struggling middle-class households, calling for investments in infrastructure and clean energy (a point with which others agreed). As I’ve written before, it’s harder to raise the median wage than the minimum wage.
—College affordability: There were some nuanced differences between their plans. Relative to Sanders and O’Malley, Clinton wants students to have some financial skin in the game. One thing we clearly heard tonight was a role for government in helping students attend college without loading up on debt.
—Balancing work and family: Mandated paid family leave was another strong agenda item. When a moderator pushed Clinton and Sanders to defend the issue in the face of Republican claims that it would hurt small businesses, they didn’t back down a bit but noted that both California and most advanced economies provide paid leave without hurting businesses.
—Financial market reform: O’Malley came alive on this exchange, stressing a notable difference between him and front-runner Clinton: He wants to reinstate the Glass-Steagall banking legislation that places a firewall between investment banks and commercial banks. (Sanders shares that position.) Clinton believes the “too-big-to-fail” problem can be addressed without reinstating the firewall that was in place from the recession to the latter 1990s. It’s a good, substantive debate; my view is that contemporary financial markets are not vulnerable to size as much as to interconnectedness. Thus, even with Glass-Steagall in place, it is plausible that we’d still be in a position of having to bail out financial institutions.
But the larger point is less these nuances than the distance between the Democrats and Republicans on these financial matters. If you believe that markets still need strong oversight, versus repealing Dodd-Frank, then you liked what you heard tonight.
—Trade policy: I heard no love for the Trans-Pacific Partnership trade deal. In fact, the debate turned on whether Clinton was flip-flopping or evolving by opposing the deal she once touted as the “gold standard” of trade deals. She made a plausible case that she hasn’t liked the way the deal itself has evolved since she last looked in on it, but Jonathan Weisman at the Times notes that, if anything, the TPP has drifted left since then.
—Health care: Bernie Sanders basically touts single-payer health care for all, pointing out that Denmark, Norway and Sweden provide such comprehensive social protections. Other candidates argued— fairly, I thought — that we’re not Scandinavia, but that there was more to do to ensure affordable coverage, including dealing with runaway drug costs.
And there was more: criminal justice reform, profit sharing, a fairer tax system wherein the wealthy pay more (Clinton mentioned a middle-class tax cut, something I don’t think her campaign has trotted out yet), a tax on financial transactions, fees on over-leveraged banks, accountability on Wall Street by prosecuting people instead of institutions and reeling in the rise of money in politics by taking on the Citizens United decision by the Supreme Court.
The strong sense from these candidates on the economy, particularly Clinton, Sanders, and O’Malley, was that when it comes to raising the living standards of middle- and low-income families, the American economy has gone off course, and it will take extensive government action to get it back on track. Such actions would empower the least advantaged while holding those at the top of scale who’ve been disproportionately reaping the benefits of growth accountable, through regulation on finance and through higher taxes. Those revenues would be used to provide opportunities for the many of the wrong side of the inequality divide.
The difficulty of getting that quite progressive agenda through Congress hardly came up; tonight seemed more about laying out the ideas and exploring some differences, though as I’ve noted, those were pretty minor. Still, I’d like to see more time spent on that question of implementation in later debates and I suspect I’m not alone. A number of good ideas were raised on that stage tonight. It would be useful to hear what the candidates think it takes for them to come to fruition.
One final observation. I’m old enough to remember when Democratic candidates, including Clinton’s husband, were compelled to tack to the center in these debates. Bill Clinton pledged to “reform welfare,” not finance. What explains the leftward drift? I’d say it’s (a) decades of inequality, where “unstacking the deck,” as Hillary Clinton put it, or, in Sanders’ words, “going after the millionaires and billionaires,” is widely viewed as a necessary policy goal and (b) the rise of a diverse, multi-racial electorate that is legitimately insisting that their preferences (and their lives) matter.